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BHS pension trustees were concerned at sale to Dominic Chappell BHS pension trustees were concerned at sale to Dominic Chappell
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The BHS pension trustees were concerned about the sale of the retailer to Dominic Chappell for £1and believed it was “materially detrimental” to the pension scheme, newly published documents have revealed. The BHS pension trustees were concerned about the sale of the retailer to Dominic Chappell for £1 and believed it was “materially detrimental” to the pension scheme, newly published documents have revealed.
The documents, released by the parliamentary committee investigating the demise of BHS, raise new questions about why the deal was allowed to go ahead and increase the pressure on Sir Philip Green, Chappell and the latter’s advisers.The documents, released by the parliamentary committee investigating the demise of BHS, raise new questions about why the deal was allowed to go ahead and increase the pressure on Sir Philip Green, Chappell and the latter’s advisers.
An analysis of the risks involved ahead of the deal by lawyers Olswang, which advised Chappell’s consortium, said the pension trustees were concerned and were seeking to involve the pensions regulator.An analysis of the risks involved ahead of the deal by lawyers Olswang, which advised Chappell’s consortium, said the pension trustees were concerned and were seeking to involve the pensions regulator.
Green controlled BHS for 15 years until he sold it to Chappell’s Retail Acquisitions for £1 last spring. The company collapsed this April, putting 11,000 jobs at risk and leaving a £571m pension deficit.Green controlled BHS for 15 years until he sold it to Chappell’s Retail Acquisitions for £1 last spring. The company collapsed this April, putting 11,000 jobs at risk and leaving a £571m pension deficit.
Olswang drew up a “pension risk matrix” just days before Chappell bought BHS on 11 March 2015. The firm also said Retail Acquisitions had no direct access to the BHS pension trustees and that it had not been provided with an up-to-date actuarial valuation of the pension scheme while it was conducting due diligence on the retailer.Olswang drew up a “pension risk matrix” just days before Chappell bought BHS on 11 March 2015. The firm also said Retail Acquisitions had no direct access to the BHS pension trustees and that it had not been provided with an up-to-date actuarial valuation of the pension scheme while it was conducting due diligence on the retailer.
Olswang also said the pensions regulator and the pensions protection fund were potentially seeking an equity stake in BHS in return for agreeing to a restructuring of the pension scheme called Project Thor, which the law firm described as expensive.Olswang also said the pensions regulator and the pensions protection fund were potentially seeking an equity stake in BHS in return for agreeing to a restructuring of the pension scheme called Project Thor, which the law firm described as expensive.
In a list of risks connected to the pension scheme, Olswang wrote of a lack of information. It said: “We would ordinarily expect full disclosure of all pension information including historical information, all advice in respect of Project Thor and direct access to the trustees.In a list of risks connected to the pension scheme, Olswang wrote of a lack of information. It said: “We would ordinarily expect full disclosure of all pension information including historical information, all advice in respect of Project Thor and direct access to the trustees.
“We are instructed that it is not possible in the time available and that the transaction will nevertheless proceed.”“We are instructed that it is not possible in the time available and that the transaction will nevertheless proceed.”
Olswang drew up another document on 6 March 2015. Headlined “issues list”, it broke down the different views of the seller and buyer during the negotiations.Olswang drew up another document on 6 March 2015. Headlined “issues list”, it broke down the different views of the seller and buyer during the negotiations.
It stated that the seller, Green’s retail business Arcadia, believed Retail Acquisitions should assume the full risk of the pension deficit and pay for a restructuring of the scheme. It also referred to a “potential £500m hole in the pension funds”. This appears to contradict Green’s evidence to MPs last week that he never planned to run away from the deficit. It also demonstrates that Chappell was aware of the pension problems BHS faced.It stated that the seller, Green’s retail business Arcadia, believed Retail Acquisitions should assume the full risk of the pension deficit and pay for a restructuring of the scheme. It also referred to a “potential £500m hole in the pension funds”. This appears to contradict Green’s evidence to MPs last week that he never planned to run away from the deficit. It also demonstrates that Chappell was aware of the pension problems BHS faced.
Drafts of the sale agreement between Arcadia and Retail Acquisitions show Green initially pledged to provide a “£50m war chest” for the pension scheme. In a later version, however, this became a commitment to pay £5m a year for three years towards the scheme and a maximum of £15m towards any “unpaid contributions” if it was restructured.Drafts of the sale agreement between Arcadia and Retail Acquisitions show Green initially pledged to provide a “£50m war chest” for the pension scheme. In a later version, however, this became a commitment to pay £5m a year for three years towards the scheme and a maximum of £15m towards any “unpaid contributions” if it was restructured.
A spokesman for Green declined to comment on the evidence. A source close to him, however, said it “blows a hole” in claims that Chappell was not told about BHS’s pension deficit, and that Green was committed to contributing between £40m and £50m to the pension scheme throughout the negotiations.A spokesman for Green declined to comment on the evidence. A source close to him, however, said it “blows a hole” in claims that Chappell was not told about BHS’s pension deficit, and that Green was committed to contributing between £40m and £50m to the pension scheme throughout the negotiations.
Chappell’s evidence to the committee about the pension was also questioned by the chair of the BHS pension fund trustees, Chris Martin, in a letter sent to the MPs after the serial bankrupt appeared in parliament. Martin said it was “incorrect and entirely untrue” that the trustees had told Chappell ahead of the sale that they would be supportive of a restructuring plan similar to Project Thor and had promised to deal with the regulator.Chappell’s evidence to the committee about the pension was also questioned by the chair of the BHS pension fund trustees, Chris Martin, in a letter sent to the MPs after the serial bankrupt appeared in parliament. Martin said it was “incorrect and entirely untrue” that the trustees had told Chappell ahead of the sale that they would be supportive of a restructuring plan similar to Project Thor and had promised to deal with the regulator.
He said the trustees were also clear that the cost of a Thor-style restructuring would be significantly more than the £50m to £70m indicated by Chappell during his evidence. “I do not know where he obtained these figures from,” Martin wrote.He said the trustees were also clear that the cost of a Thor-style restructuring would be significantly more than the £50m to £70m indicated by Chappell during his evidence. “I do not know where he obtained these figures from,” Martin wrote.